The award-winning Dunedin division of engineering specialist Milmeq is closing with the shock loss of 40 jobs.
The remainder of the private, family-owned company is being split up and sold to other New Zealand and Australian companies, which secures 25 Auckland jobs and eight in Brisbane.
Milmeq's Dunedin manufacturing plant has been for sale for about six months and, with no new orders, the decision had to be taken to close, board chairman Ralph Marshall said when contacted in Melbourne yesterday.
“It's far from an ideal time (for staff),” Marshall said of the looming Christmas break. He was hopeful about 30 of the 40 Dunedin staff could be offered work with the buyers, but that would be dependent on their availability to relocate to Christchurch, Hastings, Auckland or Brisbane.
“It (Dunedin closure) is absolutely the low point of this transaction - unavoidable but incredibly difficult,” he said.
Milmeq custom-designs, engineers and manufactures systems for primary food-processing, materials-handling, chilling and freezing within the protein industry.
He said: “world markets have been challenging” for the past 12 to 18-months, with inter-company consolidations, Australia's drought and the uncertainty surrounding the US-China trade tariff war.
“Companies are just not making reinvestment decisions at the moment,” Marshall said.
While there had been no interest from local engineering companies to buy the division, Marshall hoped they might be in a position to offer some jobs. “(But) it seems everyone is at capacity,” he said.
He reassured staff, material suppliers and clients that “all obligations would be met,” including completion of projects already underway. Contracts could take between 6 months and two years to secure, and there were none at present.
Marshall declined to disclose the sale price.
Last Friday a sale agreement was signed for Milmeq's chilling and freezing capability to New Zealand listed company Mercer Group, effective from March 1. A separate conditional agreement, expected to be settled in January with Australian project delivery company Wiley & Co, has been made for the sale of Milmeq's meat processing system design and engineering capability. It will be Wiley & Co's first foray into New Zealand.
Marshall said the Dunedin site did not fit into the growth strategy for either Mercer or Wiley. Staff would, as planned, take leave from December 21 for the Christmas break, then in a “staggered” closure they would later return and complete existing contracts, before being laid off.
No decision had been made on the future of the premises, on the corner of Portsmouth Drive and Strathallan St.
In mid-2013 Milmeq in Dunedin had about 70 staff. At the time it had just won an $A18 million (then $NZ21.7 M) contract to provide processing technology to a new beef plant in Australia's Northern Territory.
Marshall said Milmeq had over several decades provided processing plant for between 500-600 companies worldwide.
The company was established in Dunedin and it began operations in 1952 as Refrigeration Engineering and by 2011 its four engineering contracting business units, Realcold Industrial, Realcold Mechanical, Millers Mechanical and Realcold Milmech were merged and renamed Milmeq.
In 2011 Milmeq won the top award in the mechanical and manufacturing category of the NZ Engineering Excellence Awards. In 2016, Milmeq was a finalist in three categories in the Otago Chamber of Commerce business awards, in the Business skills category, for the manufacturing and primary sector, plus
international trader and innovation categories.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.